Indonesian Rupiah moves little as US Dollar (USD) remains steady amid safe-haven demand

USD/IDR remains steady after registering minor gains in the previous day, trading around 17,930 during the European hours on Tuesday. However, the pair may further appreciate as the US Dollar (USD) gains momentum, largely driven by a surge in safe-haven demand amidst escalating geopolitical conflicts.

Xinhua News Agency reported that Yemen's Houthi group launched coordinated missile and drone strikes against Saudi Arabian military bases, an oil facility, and major airports. Houthi spokesman Yahya Saree confirmed a hit on King Khalid International Airport in Riyadh that disrupted local air traffic, prompting investors to flock to traditional safe-haven assets like the Greenback.

Additionally, the Greenback remains stronger due to a significant rally in US Treasury yields, which have reached fresh 24-year highs. This surge in yields stems from a persistent global bond selloff fueled by expanding fiscal deficits and persistent inflationary pressures. The latest ISM data further reinforced these inflation concerns, showing that input costs in the US services sector recently increased at their fastest pace in more than four years.

Dollar support persists as Euro weakness and rising yields offset equity strength

ING’s Francesco Pesole highlights that “the dollar has continued to find support at the start of this week,” with the move still largely driven by “the euro’s idiosyncratic weakness” and “global bond yields that keep pushing higher.” He notes that “strong equity performance likely capped USD gains and allowed some high-beta currencies to outperform,” yet stresses that “the domestic backdrop remains constructive for the greenback,” keeping the Dollar underpinned even as risk assets rally.

The USD/IDR pair resisted appreciation as the Indonesian Rupiah (IDR) could receive support due to domestic fiscal conditions through August, supported by revenue growth, even as tax-restitution delays reportedly persisted. Traders await key domestic economic releases due later this week, including September foreign exchange reserves and August retail sales figures.